Mergers are nothing new in the drug development industry, but when two companies with substantial operations locally are involved, it’s worthy of note. In mid-July, drug-maker AbbVie announced it would acquire Shire Pharmaceuticals for $54 billion. It’s the biggest acquisition of the year.
Large acquisitions involving Massachusetts biotechs have generally fared well. In 2007, EMD of Darmstadt, Germany, acquired Rockland-based Serono. Just three years later, it acquired Massachusetts-headquartered research products company Millipore. The result has been overall growth in Massachusetts’ headcount of the sister companies EMD Serono, which expanded its Billerica research site in 2011, and EMD Millipore, to over 2,100 employees by 2013.
In 2008, Millennium Pharmaceuticals of Cambridge was acquired by the Japanese pharmaceutical company Takeda. Since then, Millennium – The Takeda Oncology Co. has increased its headcount by several hundred and broken ground on a new 230,000-square-foot facility at 300 Massachusetts Ave. in Cambridge.
While the number of employees at Sepracor in Marlboro has been reduced since its acquisition by Osaka-headquartered Dainippon Sumitomo in 2008, its newer incarnation, Sunovion, has scored two drug approvals in as many years with Aptiom, which treats epilepsy, and Latuda, a treatment for bipolar disorders in adults.
No acquisition reverberated as much in the local industry as the 2011 acquisition of one of the area’s founding biotechs, Genzyme, by the French pharmaceutical company Sanofi, for $20.1 billion. Since then, Genzyme, which has retained its own name, completed the construction of a new biologics manufacturing plant in Framingham, and announced plans for an additional facility there to manufacture its treatment for Fabry Disease, Fabrazyme. Meanwhile, its parent company Sanofi completed its own expansion in Cambridge at 640 Memorial Drive and its CEO, Christopher Viehbacher, announced that he’ll soon be moving from France to the Boston area.
Buying Into Mass.
Company acquisitions can sometimes be about eliminating a competitor or moving product development and manufacturing from one place to another. The common trait of each of the sample acquisitions above was the intent of the buyer to acquire and grow an asset. Not only were these companies buying investigational drug technologies and products, they were buying into the Massachusetts life sciences cluster – the people, the expertise, the collaborative research infrastructure.
The AbbVie-Shire deal presents a twist on the model. Neither company is headquartered in Massachusetts. AbbVie is headquartered in the Chicago area, while Shire is headquartered in the United Kingdom. Both have substantial operations in Massachusetts. AbbVie operates 10 manufacturing sites worldwide, only two of which manufacture biologic drugs. One of these is in Worcester, which features more than 400,000 square feet of biologics manufacturing space. Worcester is also AbbVie’s biologics research and development center, with over 20 investigational drugs in some phase of development. Approximately 700 people work at the Worcester site.
At 1,500 employees, Shire is the seventh largest employer in the biopharma industry in Massachusetts. It entered Massachusetts by acquisition, buying Cambridge-based Transkaryotic Therapeutics (TKT) in 2005. In 2008, it began building its 600,000 square foot research and manufacturing campus in Lexington. It also maintains a manufacturing operation in the Alewife area of Cambridge.
So, this is not an out-of-state pharmaceutical company buying into Massachusetts. It’s essentially the merger of two companies that have already made substantial investments in the region. Does two minus one equal less jobs for Massachusetts?
It is hard to imagine a scenario in which some redundancies in corporate operations among the three Massachusetts sites are not removed – HR-speak for cutting jobs. That said, there is no doubt that Shire’s Lexington facility is the gem of all Shire operations. Similarly, AbbVie refers to Worcester as its “premier biologics research and development” site. It is inconceivable that Shire’s brand new biologics manufacturing plant, where commercialized drugs are in production and have patent protections for years to come, would go through anything worse than a change in signage. While the companies have different therapeutic targets for their drug development, they are both committed to a focus on biologic products.
Having already bought into the Massachusetts cluster, there is room to speculate that the new AbbVie will continue to grow here.
Peter Abair is director of economic development and global affairs at the Massachusetts Biotechnology Council (MassBio).
